SoCal IP Institute :: July 1, 2013 :: The Line Between Patent and Antitrust &Undue Experimentation Under 35 U.S.C. 112

Our weekly SoCal IP Institute meeting on Monday, July 1, 2013 will be a discussion of a recent Supreme Courtcase regarding the line between patent and antitrust and a Federal Circuit decision on enablement. Brief synopses of the cases appear below.

FTC v. Actavis, Inc., Case No. 12-416 (U.S. June 17, 2013) (available here). In this case, the Supreme Court held that agreements amongst competitors involving one of the party’s patents do not a priori avoid antitrust liability because of the agreement pertained to a patent owned by one of the parties. In this case, Solvay Pharmaceuticals obtained a patent for a product called AndroGel. Two parties filed ANDA notices related to AndroGel and Solvay sued. The parties subsequently settled with an agreement by the two parties not to enter the market in exchange for payments from Solvay. The FTC sued alleging that the agreement was a violation of Section 5 of the FTC Act. The district and appeals court agreed that the agreement did not raise antitrust concerns because any anticompetitive effects of a settlement fall within the scope of the patent’s exclusionary potential. The FTC appealed and the Supreme Court held that the lower courts must at least consider and counterbalance the patent’s exclusion with any anticompetitive behavior applying the so-called “rule of reason” approach. The Supreme Court did not go so far as to call such “reverse payment” agreements anticompetitive, but indicated that such situations may pose a problem under antitrust laws.

Wyeth v. Abbot Labs, (Fed. Cir. 2012-1223, 1224 (June 26, 2013) (available here). Wyeth and Cordis appealed from a district court decision granting summary judgment that claims of two patents are invalid for non-enablement. The Federal Circuit affirmed. Specifically, the patents are related to the use of rapamycin for the treatment and prevention of restenosis. The claims recite a method of treating “restenosis in a mammal . . . which comprises administering an antirestnosis effective amount of rapamycin to said mammal. The repamycin refers to a class of compounds that were known at the filing date of the relevant applications. The primary question on appeal was whether undue experimentation was required to use the invention, specifically to determine which repamycin, construed as “structural analogs to sirolimus that exhibit immunosuppressive and antirestenotic effects.” The district court found that the claims did require undue experiementation, thus rendering the patent non-enabled.

Specifically, the Federal Circuit found that even accepting the plaintiff’s argument that the molecular weight of compounds would have directed one of skill in the art to a subset of the potentially millions of viable compounds, that there remained tens of thousands of potential compounds that might be viable and would require screening by one seeking to practice the invention. Further, the court pointed out that appellant’s own witnesses testified that even minor alterations to the sirolimus molecule could impact its immunosuppressive and antirestenotic properties. Because the “rapamycin” term was construed based upon its functional properties, not as any specific compound or group of compounds, the Federal Circuit agreed with the district court, finding that the requirement to screen potentially thousands of potential compounds in order to practice the invention constituted “undue experimentation” making the patent non-enabling.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 1, 2013 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.